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Knives Promotion Carves Out More Sales for Metro

$html.esc($author.firstName) Bells By Karen Bells on June 11, 2015

A set of high-end kitchen knives helped a Canadian grocery chain cut through its assumptions about its customers’ spending habits and carve out information useful for structuring future rewards efforts.

Metro Inc., the third-largest grocer in Canada with 564 stores under four main banners, ran an 18-week program that allowed shoppers to earn stickers – one sticker per $10 of spending – redeemable for nine knives and knife accessories. The company wondered if it could entice its best customers to spend more than they typically do, Natalie Voizard, senior director of loyalty for Metro, told an audience June 11 at the Food Marketing Institute’s FMI Connect conference in Chicago. In fact, Metro designed the campaign so even those best customers would have to stretch themselves to spend enough to earn all nine products in the 18-week promotion period.

The results of the rewards campaign, which closed in mid-January, were positive and a bit surprising for Metro. The participating shoppers, about 70% of whom were among the grocer’s best customers, increased both their basket sizes and store visits. As the promotion wound down to its last couple of weeks, spending and frequency accelerated significantly, Voizard said, as shoppers presumably hurried to attain all the products before it was too late.

Creating a short-term promotion and limiting redemption for products strictly to the 18-week window helped create a sense of urgency, she said, as well as a buzz among shoppers. While Voizard didn’t reveal specific spending, she said top-line sales were “impressive for us, above expectations” and did not diminish profit margins.

Metro – which posted 2014 revenue of $11.6 billion Canadian (U.S. $9.4 billion) – attributes the rewards campaign’s success to several factors, including the urgency of the short campaign; the quality of the products; the emphasis on clear communication; the structure and execution of the promotion, for which it partnered with Netherlands-based BrandLoyalty; and the heavy emphasis on the use and collection of data.

Bruce Kerr, president of BrandLoyalty North America, which designs promotions and reward initiatives primarily for grocers, said the emphasis on data is crucial, along with understanding  which measurements are important to the campaign.

Some Metro operations staff weren’t thrilled with the additional stress of running a promotion campaign during the extremely busy holiday season, but Voizard said plenty of communication and training were built in to generate enthusiasm. Metro and BrandLoyalty created a training manual for staff and hosted training webinars, plus created T-shirts and sweaters for employees to promote the campaign. A team of executives from finance, operations, loyalty, marketing and more met on a weekly basis throughout the promotion to hash out problems, and they made it clear to staff there was support from the top.

To keep customers informed, Metro ran an email campaign, radio campaign, featured the knives promotion in weekly fliers, ran weekly online marketing including efforts specifically for loyalty members, and leveraged the digital capabilities of AIR MILES, the coalition marketing program operated by Toronto’s LoyaltyOne, which owns a majority stake in BrandLoyalty. Metro has been an AIR MILES participant for 17 years.

In stores, displays were placed prominently in the front, with samples of the promotional products for customers to check out.

The promotion was designed to give Metro apples-to-apples results, Voizard said. It ran in 21 Ontario stores within the chain’s conventional banner, with the remaining 115 stores in that banner and area used as a control group. Sales growth among those who redeemed for prizes ranged from 1.5% to 4%, and basket-size growth ranged from 3% to 7%.

Instead of a promotion that’s a mere stab in the dark, Voizard said this one helped Metro learn plenty about how to motivate and reward its shoppers while slicing out information it can use down the road.